1. Is your employee handbook up-to-date?
2. Do your managers understand and comply with progressive discipline practices?
3. Do you have detailed job descriptions to hold employees to objective standards?
4. Do your Human Resources practices reduce your liabilities as an employer?
5. Are you prepared to adapt to changes in Human Resources/Benefits regulations?

If you answered No, or I’m Not Sure, to any of the questions above, you may be placing your company in jeopardy. Recent reports support the tale that during an economic downturn, employment lawsuits rise. A recent overview of the legal landscape by The Legal 500, a 20-year old publication providing comprehensive worldwide coverage on legal services providers, confirmed this fact:

The onslaught of wage and hour litigation continues unabated, although the focus has now turned to cases of greater complexity or those relating to specific industries such as pharmaceuticals or construction. The other main development in this area is the increase in litigation resulting from widespread reductions in force. As the hostile economic climate of 2009 forced workers to scrutinize the reasons for their termination in more detail it made them more likely to pursue claims of wrongful termination when they couldn’t secure employment elsewhere. Along with these trends, new legislation continues to fuel changes in the employment landscape.

What are you doing to protect yourself?

In our next post, we will discuss two cost-effective ways employers can protect themselves from the ever-growing tide of employment lawsuits.

Employees working for Los Angeles organizations were surveyed anonymously early this spring by the LA Business Journal to measure their overall satisfaction with their work place. Key criterion used to determine the ranking related to leadership, corporate culture, work environment, training, development, communications, planning, pay and benefits.

Faith Branvold, CPEhr’s president, said,

“It is a tremendous honor to have been recognized by the Los Angeles Business Journal. It is our team of skilled professionals that makes CPEhr a great place to work.”

CPEhr offers a wide range of benefits and programs to its employees that promote a positive and productive work environment. These programs are also offered to the organizations to which CPEhr provides Human Resources services. Employees enjoy activities such as the CPEhr Olympics, corporate softball, weekly yoga classes, and monthly employee recognition and birthday celebrations.

Branvold continued,

“For nearly 30 years, we have worked hard to shape our company’s culture to a family environment. We believe that dedicated, happy employees will ensure employee retention while providing the best service possible to our clients,” said Branvold. “It has always been our philosophy that a strong team is based on respect, recognition, positive reinforcement and teamwork.”

If you would like to learn more about Human Resources Consulting, HR Outsourcing, or Professional Employer Organizations, please click the links above, or call us to speak with a Senior HR Business Consultant.

As we continue to face an uncertain future, one thing is for certain – employers must remain focused on cost-containment and improving efficiencies. One way employers are addressing these employment challenges is through Human Resources Outsourcing.

How Does HR Outsourcing Work?

Like any outsourcing relationship, human resources outsourcing is the practice of using an outside expert to manage the day-to-day administration of non-essential employment tasks. Off-site specialists handle the non-core activities related to employment administration, payroll, benefits, taxes and workers’ compensation insurance. and other complex workplace regulations.

Primary Reasons to Outsource

There are many reasons why small companies outsource their HR functions. These can include:

• Reducing employment cost and expenditures by accessing the HRO firm’s economies-of-scale
• Increasing corporate efficiencies
• Accessing more comprehensive and competitive health insurance plans
• Reducing risks and exposures related to governmental regulations
• Focusing internal resources on core business activities

The Value of Outsourcing HR

In a survey conducted by the Society for Human Resource Management, or SHRM, professionals in the industry were asked their opinions on HR outsourcing, and the majority listed “saving money” as the No. 1 reason. However, other reasons for outsourcing included:

• Focusing on strategy
• Improving compliance
• Improving accuracy
• Lack of in-house experience
• Taking advantage of technological advances
• Offering services they could not offer.

In that same SHRM report, HR professionals said the top function outsourced was 401k administration, along with training, health care and employee benefits administration, payroll, staffing, background checks, recruitment and policy writing.

Once HR and other operations are outsourced, many companies are showing a strong return on investment, according to a recent survey of American executives. A survey of executives at the IDC Midwest Conference showed nearly 85 percent of the respondents saved as much as they spent on outsourcing, with 26.4 percent reporting a savings of twice as much. And the savings, according to nearly 95 percent of the respondents, went toward operational performance and innovation, which improved shareholder value.

To investigate if HR Outsourcing is right for your company, please contact us for a complimentary HR Cost Analysis.

Consider the following criteria when selecting a provider:

Years in Business
PEO firms, and many HR firms, are entrusted to pay payroll, taxes and insurance premiums. Look for a firm that has strong financial credentials, long-term banking relationships and the ability to prove taxes and insurance premiums have been paid timely.

Proven Service Track Record
Stable finances and longevity does not necessarily equate to good human resource practices or customer service. The HRO firm must have a strong team of licensed human resources professionals with a proven track record of assisting clients in all areas of regulatory compliance, safety and benefits.

Size and Diversity of Client Base
The ideal HRO firm will have a large and diverse client base, serving a wide range of industries. The diversification insulates the firm from fluctuations within a particular market and dilutes the risk over many industries. Diversification can take the form of industry, size of employee base, and geographic location. A large, diversified base of clients also adds to the depth of experience of the firm and their ability to service your particular business.

Local Market Presence
Many labor and tax laws vary from state to state. Look for a firm that has expertise in the state in which you do business, and has strong relationships with local vendors and insurance companies. For California employers, this is particularly critical as California regulations differ greatly from federal guidelines. Additionally, a local corporate office will ensure quicker response time and on-site presence.

Flexibility in Service Offering
Many HR firms take the “one size fits all” approach by requiring clients to take all the services offered, from payroll and insurance, to benefits and training. It is important to look for a vendor that is flexible in their offering and is able to customize an HR solution to match your company’s individual needs.

High-Touch Service Model
Many HRO firms follow a high-tech/low-touch approach with services provided primarily through on-line self-service platforms. While this is attractive to many employers, look for a firm that is also available for on-site appearances. It is crucial for the HRO firm to have a qualified team available to meet live with your staff, whether for benefits open enrollment, claims investigations, employee relations, or manager training seminars.

CPEhr: An HR Outsourcing leader for close to 30 years.

Headquartered in Los Angeles, Human Resources Outsourcing firm CPEhr is one of California’s leading Professional Employer Organizations. Founded in 1982, CPEhr has assisted hundreds of clients understand and comply with California’s complex regulatory and insurance systems.

CPEhr began as a small payroll and HR provider, with 10 corporate employees. Over the past two-and-a-half decades, CPEhr has grown to employ close to 90 corporate professionals in the areas of Employment Administration, Labor Law Compliance, Management Training, Safety and Risk Management, Employee Benefits, Retirement Planning, Payroll and Accounting. CPEhr services 15,000 employees at over 300 client locations nationwide.

CPEhr offers a flexible HR Outsourcing solution, wherein you can select from three programs, based on your company’s needs:

• A PEO Solution offers the ultimate in employer service and protection. CPEhr creates a “Co-Employment” relationship in which they share the employment liability and administration with you.
• An HRP Solution offers the complete range of services offered under the PEO, without creating a Co-Employment relationship.
• The HRO Solution enables you to pick-and-chose the exact services needed, in a completely customized relationship.

If you are researching PEO or HRO vendors, contact CPEhr to request a quote for our services.

What is a PEO?

Simply put, a PEO is a niche industry in the broader Human Resources Outsourcing field, and creates a “co-employment” relationship with its clients to provide HR consulting support, employee benefits, workers’ compensation insurance and payroll/tax services.

From the NAPEO (the PEO’s National Association) Website:

Professional employer organizations (PEOs) enable clients to cost-effectively outsource the management of human resources, employee benefits, payroll and workers’ compensation. PEO clients focus on their core competencies to maintain and grow their bottom line.

Businesses today need help managing increasingly complex employee related matters such as health benefits, workers’ compensation claims, payroll, payroll tax compliance, and unemployment insurance claims. They contract with a PEO to assume these responsibilities and provide expertise in human resources management. This allows the PEO client to concentrate on the operational and revenue-producing side of its operations.

A PEO provides integrated services to effectively manage critical human resource responsibilities and employer risks for clients. A PEO delivers these services by establishing and maintaining an employer relationship with the employees at the client’s worksite and by contractually assuming certain employer rights, responsibilities, and risk.

Businesses across America have discovered the incredible value of PEOs because they provide:

• Relief from the burden of employment administration.
• A wide range of personnel management solutions through a team of professionals.
• Improved employment practices, compliance and risk management to reduce liabilities.
• Access to a comprehensive employee benefits package, allowing clients to be competitive in the labor market.
• Assistance to improve productivity and profitability.

Contact CPEhr if you think a PEO may be a good fit for your organization.

Administrative Services Outsourcing (ASO)

There has been a growing interest in offering non-PEO services in recent years. Known as ASO (Administrative Services Outsourcing), this service model offers clients a full range of human resources consulting, insurance administration and payroll services, without requiring the establishment of a co-employment relationship. An ASO relationship is also more commonly known as Human Resources Outsourcing.

Our firm began offering ASO services approximately five years ago, after our sales force experienced challenges to selling co-employment. In some cases, the reasons were tangible concerns, such as a risky blue collar operation with bad losses which was declined workers’ coverage through the PEO, or a small employer with minimum-wage employees that did not meet our minimum contribution levels for health insurance, or a long-term broker relationship which dashed the sales process.

In other cases, the objections were less tangible, but just as real. Prospects could not completely grasp the co-employment concept, felt they would be losing control over their employees, or simply looked at the PEO industry with suspicion. Insurance agents, fearful of losing a commission, didn’t help the sale either.

Recognizing the value proposition a PEO offers to small business, but fearful that the co-employment requirements could hinder sales, we adopted a more flexible, customized approach to selling human resource services. The philosophy was simple – if we already had the in-house experts available to provide a valuable service to a business, why should we force the PEO box – and possibly lose a deal – if the co-employment relationship did not work for a particular prospect?

Full service HR in a flexible environment

In an ASO relationship, clients can either maintain their existing benefits and workers’ compensation insurance plans, or the PEO shops their insurances on the open market. The win-win is obvious – clients maintain control of their own plans, and other concerns about co-employment can be avoided. At the same time, they still gain access to virtually all the PEO’s services. For the PEO, it can charge administration fees commensurate with the services provided, and maintain broader “golden handcuffs”.

The multi-service approach offers the PEO sales staff greater flexibility when consulting and packaging HR outsourcing services. It also promotes a more customer-centric sales approach, as the sales consultant can walk into a first sales call with no preconceived end-game or one-size-fits-all philosophy.

Particularly in today’s volatile economy, many small employers are hesitant to engage in complex, long-term financial arrangements. By its very nature, co-employment is a more involved relationship that is hard to enter, and even more difficult to break. The current economic climate is another reason ASO may be considered a more attractive option for a businesses looking for HR support.

Keep your HR options open

If you are considering using an outside service to assist you with your Human Resources management, take some time to investigate the benefits of both ASO and co-employment. Chances are, one of them will work for your organization, and  you’ll be on your way to simplifying your business operations, reducing your HR risks, and cutting employment overhead.

Co-Employment

Co-Employment is the relationship created between a PEO and its clients, wherein the PEO assists its clients in reducing the risks and responsibilities of being an employer. Co-Employment is defined as the contractual allocation and sharing of employer responsibilities between the PEO and the client. The PEO assumes the role of the Administrative Employer and is recognized as the legal Employer-of-Record. The PEO takes on numerous administrative, and strategic, functions for their clients. These functions include:

• Paying the Employees and Filing Payroll Taxes
• Issuing Workers’ Compensation Insurance Coverage
• Providing Employee Health Insurance Coverages
• Training Management and Staff
• Implementing Risk Management and Safety Plans
• Providing Employment Consulting and Compliance
• Managing Administrative Human Resource Functions

The client maintains the role as the Administrative Employer and continues to manage and oversee all day-to-day activities relating to their internal operations. They provide worksite employees with the tools, instruments and place to work, and continue to oversee the hiring, firing, establishment of wages, and direction of the workforce. The PEO assists in ensuring that worksite employees are provided with a worksite that is safe, conducive to productivity, and operated in compliance with employment laws and regulations. In addition, the PEO provides worksite employees with workers’ compensation insurance, unemployment insurance, and a broad range of employee benefits programs.

Removing Distractions and Reducing Overhead

By providing these services, PEOs enable their clients to concentrate on their core business without the challenges and distractions associated with the “business of employment.” As a result, PEOs enhance the profitability of their client companies. The PEO’s economies-of-scale enables each client company to lower employment costs and increase the business’s bottom line. The client can maintain a simple in-house HR infrastructure or none at all by relying on the PEO. The client also can reduce hiring overhead. Costs related to the monitoring of, and compliance with, employment laws are reduced, as are the often significant costs of failure to comply with such laws. In addition, the PEO provides time savings by handling routine and redundant tasks for its clients. This enables the business owner to focus on the company’s core competency and grow its bottom line.

In our next post, we will discuss an alternative to co-employment, known as “ASO” – Administrative Services Only. Most of the same services, without creating a co-employment relationship.